The Central Bank of Ireland has said the property prices may have fallen by between 12% and 26% more than justified by normal house-price criteria.

The apparent over-correction - a technical term for freefall -  has widely been blamed on the lack of mortgage credit in the market.

In a research report called, Why Are Irish House Prices Still Falling?, Central Bank  cites surveys that show Irish house prices may have fallen by as much as 70% from their peak levels of 2007.

The bank suggests that a lack of consumer confidence and expectations about further price falls is holding back purchases.

It also said that a lack of mortgage finance from banks is restricting market activity and price levels.

The new fgures come just a week after new government data showed the pace of decline in house prices has slowed for the first time in seven months.

But the Central Bank warns that any immediate revival of the sector still appears to be some way off.

Ireland in fifth year of property crisis

Ireland is in the fifth year of a severe property crisis that started when its banks lent huge amounts to property developers during the last of the country's boom years.The bank’s researchers used four separate models to assess property prices for the research.

One model found that prices were 26% below what economic fundamentals in the economy would warrant. Two other models found that prices were 16-18% undervalued.

A fourth model suggested that they were under valued by 12%.

The Central Bank said that as it enters its fifth year, the severe downturn in the residential property market has already become one of the OECD's largest and most protracted.

The CSO's residential property price index showed that the decline in value since the peak of the market in 2007 was over 47%.

Length of price decline short compared to Japan

The research pointed out that Ireland's housing prices have fallen for 16 quarters in row, but this compares to 82 quarters in Japan and 41 quarters in Switzerland.

It also noted that just 11,000 new mortgages were issued last year, down from 110,800 in the peak of 2006.

It said that almost 10,500 housing units were built last year, down from 14,600 in 2010. At the height of the housing boom about 93,000 houses were built in 2006.

The Central Bank pointed out that a positive trend in the housing market is the fact that affordability has improved in recent years, but it adds that the imposition of tighter credit conditions by the banks could diminish much of this benefit.